Following February 2022, foreign investors exiting the Russian market due to Western sanctions frequently used buy-back options (call options), i.e. a contractual right for the foreign seller to reclaim the interest in Russian business once circumstances change.

On August 4, 2026, the Federal Law No. 319-FZ (the “Law”) came into force introducing a new set of provisions to the Federal Law “On Foreign Investments in the Russian Federation” (the “Law on Foreign Investments”). Under new Article 20.1, a court may terminate the right of foreign investors from “unfriendly” jurisdictions to repurchase (buy-back) assets in Russian companies that such investors agreed with the buyers of their Russian businesses.

The Law applies to all buy-back agreements, options etc., including those governed by foreign law.

Scope of Application

The new law applies to investors from “unfriendly” countries who are:

1. individuals or legal entities connected with states designated by Russia as “unfriendly”; or
2. Russian investors controlled by foreign investors from unfriendly countries.

This regulatory framework applies to buy-back and exit agreements made after February 22, 2022, specifically affecting investors from a designated list of 49 “unfriendly” countries, including the US, UK, and all EU member states, who retained contractual rights to reclaim their transferred assets.

New Article 20.1 affects investors from “unfriendly” countries provided that such investors:

1. disposed shares in a Russian company or other business assets located in Russia in favor of a Russian citizen, legal entity or a foreign legal entity controlled by a Russian citizen or a person not from “unfriendly” country, and
2. retained the right to repurchase (buy-back) the assets under predetermined terms.

Reasons for Termination of Buy-back Right

The Buy-back right can only be legally terminated under specific, non-automatic conditions, including:

1. After February 22, 2022, a foreign investor engages in at least one of the following conduct:
2. publicly supported unfriendly actions of a foreign state or international organization against Russia, Russian citizens or legal entities; called for such actions or actions aimed at discrediting the use of the Russian Armed Forces or the activities of government agencies of the Russian Federation; or disseminated knowingly false information about this;
3. conducted activities connected with financing of terrorism, extremist activities, or financing of the proliferation of weapons of mass destruction;
4. publicly announced termination or suspension of activities in Russia or took actions (or inactions) related to such an announcement; improperly performed its corporate duties; or took actions aimed at restricting the conclusion, performance, and/or termination of agreements that are material to the Russian entity. Such actions fall within the scope of the provision where not triggered by obvious economic reasons and/or where there are grounds to believe that they are related to compliance with foreign sanctions.

• Buy-back price deviates from the market price by 25% or more; and/or

• the purchaser has made additional investments into the Russian company or assets.

Who May Seek Termination of the Buy-back Agreements

The claim to terminate a foreign investor’s buy-back right may be made by:

1. the current owner of the asset after obtaining the position of the competent ministry confirming that the claim is consistent with the objectives specified in the Law on Foreign Investments and a resolution of the Government Commission for Control over Foreign Investments (the “Government Commission”); or
2. the competent ministry, after receiving the Government Commission’s approval (potentially without the buyer’s initiative or knowledge).

Which Court Has Jurisdiction

The new law vested exclusive jurisdiction over claims to terminate the buy-back right in the Arbitrazh Court of the Moscow Region (“ACMR”).

ACMR will have jurisdiction regardless of any prorogation or arbitration agreement in the buy-back contractual documentation if the claimant alleges (and proves) that such prorogation or arbitration agreement became unenforceable due to sanctions.

Compensation

Foreign investor whose buy-back rights were terminated is entitled to claim compensation from the Russian purchaser. However, the law provides the Russian court with broad discretion to reduce the amount of compensation or deny claim for compensation.

Foreign investors may file their claims for compensation within one year after their buy-back rights were terminated.

Practical Implications for Foreign Investors

For foreign investors, the key issue is no longer simply whether a buy-back right is formalized on paper, but whether that right remains legally and commercially enforceable.

 Investors with outstanding Russian exit or repurchase arrangements should consider acting proactively rather than waiting for a dispute to arise. Early review of the transaction structure, contractual protections, valuation mechanics, investor conduct and potential jurisdictional issues may be critical to preserving available rights and developing an effective strategy.

 Our Russian law and international disputes team advises foreign investors and purchasers on the implications of the new regime, including the assessment of existing buy-back arrangements, enforcement risks, dispute-resolution strategies and potential compensation claims.